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Consumer Protections on ATM-Debit Card Fraud
Posted on Sep 30, 2006 by Tom Fragala
What protections do you have when fraud is committed using your ATM-Debit card? Will Visa and Mastercard's zero-liability always apply? (Since it is a debit card, it has Visa or Mastercard logo so it can be used like a credit card.) The answer, of course, is it depends. If your card has fraudulent activity, and the transaction went through Visa or Mastercard's network (a merchant or point of sale transaction), then you are generally covered by their policies. But if, for example, someone used your ATM-debit card to withdraw money from your checking account at an ATM machine, then you are NOT covered by Visa/Mastercard policy. In fact you are not covered by any of the credit card protection laws.
You are actually protected under something called Regulation E. If your bank can prove that you delayed reporting fraud (you don't check statements for a few months) or were negligent (you wrote your PIN on your card), then you can be left holding the bag. Let's say someone "skimmed" your card at a restaurant and pulled money from your account. That can't be your fault, so you shouldn't be held liable--unless, again, you don't report it for a long time. One of the magic numbers is 60 days after transmittal of your statement. Up to that point, your maximum liability is $500--after that, it is unlimited. If you report within two days of discovering fraud, your liability should not be more than $50.
Check your statement and account status regularly--at least monthly. Even accounts that you think are dormant (brokerage accounts, savings accounts).
Update; I should clarify one exception. If unauthorized activity did NOT take place with an "approved access device" (like a point of sale machine), then you should not have any liability. For example, if a criminal got your card number and created a bogus card and used that--you should NOT be held liable for those transactions.
Update 2: Your bank can request, but cannot require, a police report from you in these cases.
Filed under: Fraud, Identity Theft, Tips
Comments
Brad Rose on Jan 27, 2007
If someone skims your card at a restaurant - they are not going to be able to take money out of your account. They can fraudulently use your card and steal, but they can't get cash.
Every consumer and business should be watching their accounts like a hawk. Banks offer plenty of free services: telephone banking, online banking, etc.. to get info on your account.
If a consumer isn't watching their account, why should the bank take the financial hit? If a consumer is stupid enough to give their pin and other card details out, they have just violated their agreement with the bank to keep their pin secret! That is the fault of the consumer - not the bank.
Max on Oct 5, 2007
Ah Brad, so you never do anything wrong. Good for you. No pity for the lesser mortals.
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